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ARTICLE · 10 JULY 2026

Vermont Passes Commercial Financing Licensing Bill

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Vermont's newly approved House Bill 648 introduces comprehensive licensing and disclosure requirements for commercial sales-based financing and accounts receivable factoring providers, fundamentally reshaping how these financial services operate in the state. The legislation establishes strict operational restrictions, including limitations on automatic account debiting and prohibitions on confession of judgment clauses, while carving out exemptions for larger transactions and certain financial institutions

United StatesFinance and Banking
Krista Cooley
Krista Cooley
Francis Doorley
Francis Doorley
Ian Brown
Ian Brown
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Vermont Governor Phil Scott recently approved House Bill 648 (“HB 648”), which imposes licensing and disclosure requirements and account-debiting restrictions for providers of commercial sales-based financing and accounts receivable factoring. These requirements will become effective July 1, 2027.

Once HB 648 takes effect, a “provider” of “commercial financing” will be required to obtain a license prior to engaging in business in Vermont.

“Commercial financing” is defined by HB 648 to include a sales-based financing or factoring transaction. “Sales-based financing” is defined as a transaction that is repaid by the recipient to the provider, over time, as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient. Sales-based financing also includes (i) a true-up mechanism where the financing is repaid as a fixed payment but provides for a reconciliation process that adjusts the

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